From the blog

Why Social Business Keeps Failing to Deliver

If you have been reading the last few articles I have posted over here in this blog, over the course of the last few months, you may have noticed how, as of late, I have become a whole lot more critical (Hopefully, in a constructive manner) around the whole subject of Social Business and Enterprise 2.0, in general, and, although I’m still a strong believer in the whole movement (I even think we cannot longer go back and do something else. It’s changed us for good!), I am starting to question the validity and merit of a good number of motives from companies to become successful social businesses, because in reality they aren’t. They are just grabbing the wrong end of the stick thinking and hoping it will work out eventually, when we all know it won’t, and get away with it.

Well, it’s now time to up the game again and here’s another one of those thinking out loud reflections that’s been in my mind for a long while regarding Social Business and which I’m now more and more convinced it may be destroying our current business environment as we know it, more than anything else. Specially, in today’s financial conundrum. Here it goes: What if Enterprise 2.0 and Social Business are one of the main culprits why it’s taking us all so long to recover from this financial crisis? What if E2.0 and Social Business are the main reasons why we may no longer get the economy to recover as we could, or would, or should, have expected? What if we are all doomed and we are facing The End of a Job as We Know It?

The first time that I read about that particular idea of how pernicious Enterprise 2.0 may well be to the corporate world was on a Twitter exchange with Eric Norlin, organiser of the always inspiring, thought-provoking and wonderful Defrag conference event, in Denver, Colorado, where he was mentioning how more and more he was convinced that Social Business, Enterprise 2.0 or whatever other 2.0 moniker, was killing the job market and current working conditions, because businesses were adopting this shift for the wrong reasons. A few months later, I am starting to become pretty much convinced myself that he was, perhaps still is!, on to something!

If you look into the current business world out there you would see how one of the main reasons why corporations are adopting and embracing this social networking for business movement has always been cutting costs, i.e. optimizing the business with the right resources (apart from generating new business, that is!). That’s basically us, knowledge workers, still being treated as resources, instead of people, and acting accordingly when embracing all of these social technologies. HR still hasn’t made that transition from Human Resources into Human Relationships, at least, for the vast majority of businesses out there and this means that if Social Business can help them get their business optimise their resources they would be doing so, ignoring the people, and their needs, once again, and like it’s been happening for decades…

Just think of it, how many times have we seen plenty of use cases on how beneficial social networking is in helping find the right experts within organisations, or find the right information at the right time, socialising business processes accelerating speed of response, improving customer satisfaction or just simply empowering knowledge workers to become much more effective and productive while getting work done? Far too many times, don’t you think? Well, right there it is when optimizing the business kicks in, because instead of thriving to become more sustainable businesses where people are treated like people, in a much more trustworthy, responsible and valued perspective altogether, we keep seeing how the business decides to go the other direction and optimises resources, i.e. continues further along with layoffs or resource actions, or doesn’t hire enough talent just to get by, since the current knowledge workforce keeps on being squeezed out all the way. Have you ever thought about when was it the last time that you worked 40 hours per week, or, basically, the number of hours you were hired for in the first place? Another example, when was it the last time that you were working only on a single project, with a single team, budget, mission scope, goals, etc. etc. Just think of it. Probably not in the last decade or so, if not longer!

Shouldn’t we all be focusing on the long term strategy to become socially integrated enterprises where sustainable business growth becomes a norm, more than an exception? Shouldn’t we just leave behind that 20th century corporate mentality of just thinking on quarter after quarter, or on whether large corporations are pleasing Wall Street, or not (Don’t forget just how much Wall Street appreciates each and everyone of you! … Not!), and start thinking that if we don’t pay attention to such fundamental shift that social business is provoking in a proper manner we may eventually be sinking to never recover?

I mean, just think of it, what smart, brilliant, young talented workforce would want to work for your business in, say, 5 to 10 years, when they find out knowledge workers are still being treated as resources, versus relations, i.e. people? When they find out making profits at all costs for the benefit of just a few is trumping those personal business relationships to rather alarming levels? When they figure out those older generations keep being optimised big time and they don’t have anyone out there, or hardly anyone, willing to transfer and pass on their knowledge, because they may not even be there in the first place? Aren’t we making it far too complicated, and, perhaps almost impossible, for future generations of the workplace to make a difference and have a significant impact? Let’s not forget how, as things stand out, right now, we are going to face a rather interesting business problem very very soon when the active working population will be outnumbered, big time!, by those people who are no longer working, i.e. retired, of those who are perhaps a bit too young to enter the workplace just yet…

I am not sure what you would think, but I sense we are entering that stage of the point of no return, where Social Business in its purest form would need to come forward, make a stand, and show, and demonstrate, businesses, what a meaningful, purposeful, and successful social business that looks after both their customer base, as well as their employee workforce, is all about. Because somehow using Social Business, just like we did with Knowledge Management back in the day, to optimise resources to drive business revenue by cutting costs alone in the short term somehow sounds like shooting ourselves on the foot, to never recover from the injury… Do we really want to head that way, say, in the next 5 to 10 years? Probably not, so perhaps we should put a stop to it now, while we can and before it is too late. Last thing we would want to do is to keep making the very same mistakes over and over again. Haven’t we learned anything from the past experiences that have brought us to the current financial apocalypse we have been experiencing in the last few years?

Can a business nowadays, in the 21st century, become a truly connected, transparent, nimble, successful and sustainable social business while optimising operations with layoffs is still lingering around in the background? I don’t think so. What do you think? Maybe, we need to rethink the current state of the business world, not just for the right now, but for the long term, and figure out whether social business can help us revert back and head into the right direction, because something tells me we do have the potential, the energy, the good effort, the excitement, the talent to making it happen, but what’s stopping us from realising it? Reluctance to change? To think and act in a completely different way than what we have been doing for ages? To perhaps come to terms with the fact that there is a better way of doing sustainable business and we may be too afraid of jumping the shark and live it?

Well, maybe it is time to do so. Maybe we should. Before it’s just too late and can’t react in time any longer. There is just far too much at stake at this point, methinks, and not just for ourselves, but for those future generations of knowledge workers. What kind of legacy are we planning on handing over to them when we are all gone? How would you like to be remembered? As the one who planted the seeds to collect a wonderful harvest at a later time (by them), or as the one who just wanted to focus on the quarter by quarter survival without caring much about what will be happening next. Please do tell me you are made of the former kind rather than of the latter. Please. We need you. And very much so. Now.

I think the fundamental issue of Social Business is that it is still looked from the inside-out, focused on the organisation – when to me the focus should be on understanding and collaborating to meet customer needs and expectations.

When taking a Resource Based View of the enterprise (Teece, Pisano and Shuen 1997), you will see the interest of Social Business in a different light from ‘just’ providing improved means of communication.

Social Business practices provide dynamic capabilities that positively impact the firm’s managerial and organizational processes aimed at the creation, coordination, integration, reconfiguration or transformation of its resource position. Continual reconfiguration of existing
resources can be deployed to create a competitive advantage. Knowledge Workers are definitely the underdeveloped capability at present imho.

In the words of Peter Drucker, the objective of a company is to create and keep a customer. From that all else follows.

My first comment, on the positive side, is that what we are seeing is some of the growing pains of social business. Its come a long way in a short time and its normal some missteps may have been made.
I’ve seen far too often organisations take the view on social that if u “build it, they will come”. What is more important is whether the social network will be leveraged in a way that supports the organisation’s business strategy. Social business transformation is more about change management than even knowledge management. You need to be clear about the change required and educate people about its importance and help them understand the significant & benefits of making the change.

We should not forget that tools, even fantastic powerful tools, at the end of the day are just tools. If they are not used properly or are misaligned with strategy then they will not deliver. We all agree that the potential for Social business transformation is enormous to deliver more innovation, transparency and yes efficiency (through wider participation). But if the social tools are used just to share files, praise friends work regardless of quality, fill blogs with banalities or used to fill in time before going home, then social will continue to underachieve.

The most successful approach has always been a combination of bottom up and top down. To be successful we need to get beyond the social hype and focus again on the people – share with them the bigger picture, enable them and they will deliver the true transformation promised by Social Business.

As I just tweeted, Luis, “resources” is the top-down view, how people, technology, assets and so on are aligned to provide the right capabilities. “People” is the “social” bottom-up view, which is considered on the relationships level, whereas mostly horizontal.

What really matters is not the collision between these two points of view, but their conciliation, as they will coexist, for long, and that for many reasons. IMHO, this is all about subsidiarity, upward and downward delegation of power. In that sense, “people” must also be given a vertical meaning.

I agree with you, Mark, when referring to Teece’s work. But where really is the customer’s seat? The SD-logic point of view doesn’t imply alignment between customers’ and organizations’ purpose. I am not that sure that the requested focus on customers’ needs and expectations will solve the organizational part of the equation. Social CRM as a buzzword is in fact clouding the fact that what businesses really need to uncover their own purpose, beyond the spreadsheet. What I might call a new Social Contract.

Th purpose of an organisation is primarily business continuity imho, and this is met in the current way of how the economy functions by providing services to customers whilst ensuring that you do not lose money.

I would disagree that people/employees are the bottom-up view, they are part of the capabilities equation, part of the assets and resources.

I think maybe the problem stems from the idea that these human assets are considered to be liabilities or costs as the intangible value they bring are not taken into account when calculating the tangible value they bring about? Maybe this is a line of thinking to pursue regarding the Social Contract you mention?

We live in a global economy, especially ‘knowledge workers’, and business will always move toward equivalent outcomes at a lower cost.

My ‘social contract’ is very different from my parents who benefited from gauranteed state pensions and a lot of other government programs that were ‘new to the world’. We have come to realize – Greece being a shining example – that these ‘social contracts’ are not sustainable. Thinking this will solve unemployment is like thinking socbiz is going to solve the contractual issues between 2 companies.

“People” aren’t only part of assets of resources, as interactions between workers have far more power than the ones that are taken into account today. Yes and yes, intangible value is key, but is that something which can be taken into account from management point of view?
I remember Serge Soudoplatoff telling me about Lippi and Frédéric Lippi saying that “workers know much better than managers what they can and cannot tell”. Which means than from a resources, even in a large understanding encompassing intangible value, point of view, many dimensions cannot be grabbed or understood.
The problem of the quarter by quarter strategy is indeed a lack of leveraging the bottom-up potential for sustainability.

I don’t see that the 2 are incompatible, and I agree with Mark Tamis. Every initiative has to be justified on a benefits basis, and in the current market cost is a LOT easier than revenue. And reduction of HR cost, as well as a gain in efficiency and effectiveness, has been the basis for BPR, outsourcing, automation, and any number of initiatives that have affected the manner in which work is performed. This isn’t going to chnage just becuase it is now the ‘knowledge workers’ that are in the firing line.

Mark does not go far enough in his inside-out vs outside-in anology, because it isn’t just about WHAT – process effectiveness – but also WHO that needs to brought into the analysis. I was fortunate enough to work for a company based in Dallas in the late 1990s that had 7,500 employees, 5,000 of whom where of Indian origin. Believe me that anyone coming out of an Indian IIT is a ‘knowledge worker’ of great skill, but with a different work ethic thna we are accustomed to in the West. And it is a lot easier to outsource ‘knowledge work’ because the capital costs of relocating a relatively small.

Lastly blaming the sluggish economy and (relatively) high unemployment figures on Social Biz of E20 is not very sensible. True, it may be a cause for ‘knowledge workers’ finding it difficult to get a job, but it isn’t the primary reason, and it isn’t going away.

Luis,
So you have come to a conclusion which I have pondered with you and Louis R. among others.
Businesses can and will survive with fewer employees.
With every advancement comes the reality that many will not come along for the ride and off they go. Especially when others get it better.
The downside, which I have also railed against, is can everyone be an entrepreneur? Obviously not, but then if you don’t fit the modern employee, where do these people go? What happens to them?
It is not just those near retirement, but many in their 40’s and 50’s.
There is a knowledge need for these people to stick around but companies have seen they survive okay without them as well in the end.
If the tech industry now wants to pursue a flavor of the month attitude with new initiatives, analytics as an example, then we are seeing the consumerization, at lest from a marketing perspective, of corporations.
No longer do platforms last years, they last months or quarters but rarely years anymore.
The knowledge required to keep up is staggering and clients now have too much information in front of them making all choices seem equally appealing.
Change comes from the top down but also from the bottom up.

But the middle is missing or confused which side to take.

Social has a purpose but to make whole company transformations requires big changes and it may lead to losses along the way, in staff, and that is what Wall Street does like to see.

How many companies are booming and hiring 100’s of people? The same company that recently fired 1,000’s of people has 1,000’s of jobs posted on their website yet we know they are not really about hiring people to replace them but they have to post them anyway.

Business may be coming back, but to what level? Last year? 3 years ago? 5?

Luis, most of the time I tend to agree with what you say. However, I am struggling a bit to agree with you on this.

Well, I do agree that we should be focusing long term and not solely on next quarter results. I do agree that it is hard to expect dedication, openness, transparency, etc, if people feel their jobs are on the line.
However, I do not quite understand what that has to do with the use of social tools in the enterprise.

Maybe some companies are introducing social tools in order to become more efficient, in order to then reduce number of staff or to get away without recruiting more. However, this will only work if they do it properly. And doing it properly assumes creating the right mindset, good processes, etc.. And if they do that, maybe they are not too far away from the values you defend. And if they do that, staff will benefit from those tools. And even if, in the worst case scenario, they are laid off, they will have learnt a lot and they will have become better social beings.

So, call me naive, but I do believe social tools have a huge potential and, overall, will enable transformation and will smooth the ride to better workplaces.

Oh, Luis. This post makes me really sad. Probably the first time ever I’ve disagreed with you– from your headline to your basic premise. I may be living in a social business bubble, but I’m not seeing failure anywhere. I’m seeing challenges, yes. But these are more in the path of growth, learning and embrace of the fundamentals I know we both care about. Of course, I’m dealing with a stacked deck with Council members who are still highly enthusiastic about the prospects of a pure social business.

I recommend you watch this short video by John Mackey, CEO of Whole Foods. There is a movement afoot among Executive ranks to embrace a more open, trusting, inspirational leadership style. http://www.managementexchange.com/video/john-mackey-want-trust-let-people-be-their-whole-selves? I recently submitted a story for TNW on this, which should be out shortly. As soon as it is, I’ll let you know. I wish I had more time to comment here, but just wanted to weight in with a “glass is still half full” counterpoint.

Thoughtful post Luis. I have been witnessing how social technologies, adopted in the wrong environment, are actually quite efficient at reinforcing basic industrial-age corporate fundamentals: they are very useful to reinforce individual efficiency, they provide enhanced means for control, and I could even argue that they will help to reinforce silo culture, because BU heads are already adopting “their” social network, which obviously does not integrate with the other BUs ones.

I understand that we are moving out of the “efficiency” era and moving into the innovation era. It is the nature itself of the corporation that needs to change and it’s going to take years. I do agree that believers and practitioners need to make their stand now, because the promises are not here yet, and quite soon there will be à trend to find à classic ROI to social business initiatives, or else, they might be forgotten as just “another corporate project” that was meaningless.

I am also worried at how incumbents are consolidating some industries where social was emerging (talent management or performance management with Taleo taken over by Oracle or SuccessFactors taken over by SAP).

In the end, I think that if we want social business (that is, people centered corporations), we need to change them one person at a time. That is at least as important as focusing on organization or technology matters. Good news is (in my experience), there are many more believers than meets the eye in most companies

Luis, social business has the potential to take business to a higher level but it doesn’t have to. The tools and practices of social business are so powerful, they can benefit old-style, corrupt organizations or they can propel an enlightened enterprise to greatness. Either way, there are great economic benefits to be had from getting people to share information and work together.

By any metric, social business practice simply works better. I believe enlightened companies will win out in the long run against the people-are-cogs dinosaurs, but social technology will help the dinosaurs improve their bottom lines in the meanwhile.

I’m with Susan Scrupski on this one. Your post attributes causality to a neutral technology. Social business technique does not mistreat people; short-sighted people do.

Far from seeing social as a raging success that is resulting in 1000’s of people loosing their jobs, I am actually struggling to find a really successful implementation beyond ‘social media marketing’. And that is where I think the true potential lies, principally capturing all the email/FAX/phone information that is currently lost.

For me, the big prerequisite for a truly social business is a democratised decision making structure. But I’m not sure how many org’s go to the trouble of changing their “constitutions” at the same time as “embracing social”. imho, social tools laid over a traditional decision making structure have a limited chance of real success. I tend to agree with the suspicion that claims of being a “Social Business” are less than sincere unless ‘leaders’ are prepared to take a step back and accept what might be a significantly reduced role in decision making. Telling staff and customers that “we invite feedback and will listen” is great, but going a step further and giving staff and customers a meaningful vote in the decision making process is something else. Anything less seems to me to make claims of trust and empowerment a bit hollow.

I agree Austen, but the ‘turkeys’ will not vote for ‘Christmas’. If we ever develop a social company, it will be middle management that will be decimated. This was the case with BPR too. Social will not affect the rank-and-file.

What is affecting the rank-and-file employement figures are 2 related affects: outsourcing and business process automation.

The loss of jobs through ‘progress’ has been a topic throughout the ages. There are no longer rooms of monks transcribing the Bible into Latin. There are no longer slaves picking cotton in the South. There are few passenger shipsand the 1,000s of sailors, and the Pony Express has been dead for many years, along with all the stable hands and riders, not to mention the telegraph operators that were the demise of the Pony Express. Farm hands are few and far between these days.

So I just cannot make the leap from social technologies to a social business implying that our jobs will be safe and we will all sit around being nice to each other. Admittely I’d like some more job security, but as sure as heck I’m not banking my pension on it.

Luis – to quote your own words….”Shouldn’t we just leave behind that 20th century corporate mentality of just thinking on quarter after quarter, or on whether large corporations are pleasing Wall Street, or not (Don’t forget just how much Wall Street appreciates each and everyone of you! … Not!)”………

You work for one of the most quarterly driven, Wall Street-sensitive corporations on the planet – one that is very successful by many “20th century” measures. It is hardly a layoff-free zone and there is reason to believe that, particularly in the “stable” markets employee morale and commitment may not be the best ever.

AND yet, it encourages and funds you to advocate “social” technologies and business. Don’t wish to put you in a difficult position, but how do you square that circle?

Is it because conventional 20th century success enables your employer to indulge in useful marketing and PR around this for wider, but simple, “20the century” gains?

Is it possible that “social business” is rather less than a lot of (idealistic) people would like imagine, but that it has “value” to corporations because it generates perfectly “conventional” business?

Luis – your post has stimulated a great debate .
And I find myself both agreeing and disagreeing with a lot of your and others comments because there are so many variables within different organisations and so many problems with measuring the ROI of social business and its wider effects. I have just one comment to add. There appears to be an assumption throughout this thread that within any social business that 100% of the workforce use it – when this is far from the truth.

However successfully the tools are implemented, engaged with and endorsed top-down, bottom-up or however which way you see it – what percentage of any one organisation are actively engaged on a daily basis will have an impact on levels of collaboration, innovation, overal business strategy – and success because of it.

Employees engage for different reasons and on different levels – and others not at all. So when we are measuring success or failure, blaming or praising technologies , assessing potential or damage for one or more organisations- we must also understand the percentages of the workforce truly engaged within any one social business. This isn’t to say we must use fewer employees – but rather we must make sure that ALL are engaged within it. Are we really able to assess the wider socio-economic effects without that understanding?

Luis, my friend, I am not buying the case you have made. Sorry. Just not seeing enough evidence to support what sounds rather like a conspiracy theory. Far too many other things to blame for world economic woes, with far more evidence, than social business.

Speaking for my company alone, we adopted social business nearly four years ago and suffered through tough times like so many other businesses, including layoffs and restructuring — but there’s no causal connection between the two things. The business already needed to be adjusted. I would argue that our social business platform contributed to making the painful decisions humane, as they were handled openly and transparently there.

And now? We are in good shape and hiring as we grow and our social business technology helps us do that more efficiently and effectively than ever.

Sorry, mate, I am not ready to call this a sinking ship. We’re sailing along quite nicely on the social business wave.

If you find a way to do more business with relatively less, you can indeed always choose to do the same amount of business you’re doing now, with less people

However, you’re giving socbiz way too much credit here: currently there is very, very little use of it despite what the evangalysts (read my blog) claim. And if there is any, it’s cannibalising current service offerings, mainly in marketing, sales and customer service of course, where the current application of socbiz can be found

I remember Serge Soudoplatoff telling me about Lippi and Frédéric Lippi saying that “workers know much better than managers what they can and cannot tell”. Which means than from a resources, even in a large understanding encompassing intangible value, point of view, many dimensions cannot be grabbed or understood.
The problem of the quarter by quarter strategy is indeed a lack of leveraging the bottom-up potential for sustainability.

Yes, Lippi is a great story, so is FAVI.
Maybe businesses were adopting this shift for the wrong reasons, as Luis writes, as something to do with the fact that we are throwing in tools without rethinking organizations first.
Technology is neutral, and we do not make the extra [harassing] effort needed to deeply change the present weaving of relationships inside businesses, they are quick to adopt the tools to enforce the way they are already running.
Rather than technology influencing behaviors, I believe that it allows latent behaviors to surface. Clay Shirky has emphasized how it empowers people’s creativity and goodwill. But for one sharing community, how much racism or bullying?
Our role, as consultants, is in helping people think, not in helping them act.

Maybe businesses were adopting this shift for the wrong reasons, as Luis writes, as something to do with the fact that we are throwing in tools without rethinking organizations first.
Technology is neutral, and we do not make the extra [harassing] effort needed to deeply change the present weaving of relationships inside businesses, they are quick to adopt the tools to enforce the way they are already running.
Rather than technology influencing behaviors, I believe that it allows latent behaviors to surface.</i?

Hi Luis. I think we need to expand the discussion of the value of social engagement beyond ROI, while recognizing that ROI is a key metric. This post from John Stepper (http://johnstepper.com/2012/02/25/the-joy-and-commercial-value-of-social-learning/) details efforts to accomplish just that, and describes a great anecdote from Etienne Wenger about how Shell saved $120 million by implementing knowledge developed through a social learning approach.